Barclays Scandal: noose is tightening on bankers
When Bob Diamond, the ex-boss of Barclays appeared before the Treasury Select Committee last week in the aftermath of Libor scandal involving the world’s fourth largest bank, the assumption was that he would live up to the speculation that had been building up until then: he would embarrass the political establishment – especially, some members of the previous Labour government - for its implicit role in the scandal.
However, Mr Diamond proved journalistic predictions dead wrong; instead, he defended everyone who had been in power at government level when the scandal actually took place.
By deciding not to antagonise anyone in authority, Mr Diamond managed to install the first layer of defence against the growing tide of anger of the vast majority of British people who loathe the conduct of the banking giant.
When the British parliament started grilling him about his role, Mr Diamond first pretended as if he didn’t understand even some of the basic questions. When he realized that the MPs were not prepared to be sucked into his evasive tactics, he kept apologizing for the misdeeds of 14 traders who were responsible for the scandal – and on his watch.
However, the MPs admitted that they could not extract the information needed from him despite being subjected to 3-hour-long interrogation. In the end, the MPs vented their frustration by saying that Mr Diamond had been well briefed about how to face a parliament inquiry.
Mr Diamond may have got away with the grilling by MPs. However, his troubles are far from over. There are clear signs that the board of Barclays will be forced to act on his perks even if he is entitled to them on contractual grounds. Moreover, the criminal prosecution cannot be ruled out in the light of the scale of the scandal, which may put some bankers in jail.
Barclays is being accused of manipulating Libor –London Interbank Offered Rate, the interest rate at which bank borrow from each other – over a period of three years. The damning evidence has come from the intercepted emails among the traders who were accused of the manipulation; there were references to ‘opening Bollinger bottles’ for celebrations after making their money at the expense of ordinary British citizens and small businesses.
The conduct of the investment arm of Barclays which Mr Diamond once headed – and showered with his native American inspiration when the former was a struggling business entity – has damaged the bank beyond repair: it was fined nearly $ 450 million two weeks ago for the appalling misconduct; both its chairman and the CEO were forced to quit; Moody’s downgraded the bank substantially; some customers seem to be leaving the bank in embracing less controversial smaller banks to put their money in.
Since Barclays is not the only bank involved in the scandal, the likelihood of splitting banks into two distinct arms – retails and investment banking – is getting closer to the reality; this is something that the present government was reluctant to pursue for obvious reasons.
However, public pressure and the odour of growing scandal may force the authority to rein in the bankers to avoid a major catastrophe by bringing in tougher regulations.
- Asian Tribune –